The g2i programme has helped young London-based companies to secure over £26.6 million of investment so far. One of the companies, Huddle, is an online collaboration application. Here Andy McLoughlin, co-founder, gives his tips on the investment process.
Spread yourself around“First off, cast your net as wide as possible at the start of the process," advises McLoughlin. "Obviously your proposition is not going to suit every VC (and, of course, every VC won’t suit you!) but speaking to as many as possible will hopefully give you more flexibility when making the final choice.”
Cover your backMake sure your business isn’t neglected while you’re out wooing VCs! McLoughlin warns investment seekers: “Bear in mind that fund-raising can be a full time job so ensure you’ve got capable staff to look after the business while you’re meeting, preparing, pitching, doing the books, reading the contracts and – hopefully – doing the deal!”
Swot up“When presenting to VCs the old adage ‘Be Prepared’ applies," says McLoughlin. "You know your company, you know your product. You MUST know your competitors. Make sure there are no question marks over your story or you’ll be torn apart. The days of walking into a room with a funky idea and leaving with a million pounds are sadly gone. These days you need a working product, a team, some traction in a key market and a tight business plan.”
And be industry specific…“Be prepared to be grilled over your KPIs, whatever they are," says McLoughlin. "For a web business like ours they are revenue, users, activity – if you don’t have these figures then you’re probably not ready to raise serious money. Remember to convey clearly what your sustainable USP is. What is the problem you are solving” Why will customers purchase your solution over a competitor’s” Demonstrate why you are different and better.”
Grill themTurn the tables on your inquisitors! McLoughlin believes that showing some initiative can seal the deal: “Think about intelligent questions that you would like to ask the potential investors: if they were to invest what level of board participation would be involved If you are looking to strengthen your management and/or board team, are they aware of anyone who would be suitable Do they have any comments or feedback on the company’s strategy?”
McLoughlin has sat in on numerous investment meetings during his time at g2i so he knows what the majority of investors are after: high-growth businesses, with strong management teams, armed with a proposition which will bring them a timely return on their investment. If you can present all of these elements confidently and succinctly then you are on track to securing the investment you seek.
And if the outcome does not quite turn out as hoped it’s not necessarily all wasted effort. McLoughlin says don’t sweat it: “Most of the technology investors in London are approachable, friendly and willing to offer advice – even if they are not prepared to invest right now.”
g2i is funded by the London Development Agency (LDA) to support London’s young businesses. A consortium of private sector experts, led by Grant Thornton, provide the knowledge and experience necessary to ensure that these fledgling companies are given the best chance to secure investment.